First-home buyer’s money-saving tactic as RBA interest rate cut set to fuel property price boom: 'Clever'
Aussies are being warned they will face more intense competition to get into the property market and higher prices once the Reserve Bank of Australia (RBA) starts cutting interest rates again. The central bank is widely expected to lower the cash rate on Tuesday, and some Aussies are trying to beat the bull rush.
Sonali Saluja settled on her first property on Monday, a three-bedroom, two-bathroom house in Geelong purchased for $586,000. The 38-year-old senior administrator told Yahoo Finance she took the plunge because she wanted to get in while prices were “still reasonable”.
“I’ve been doing inspections actively from early March. I believed, after all the research and talking to experienced people, that this was a buyer’s market,” she said.
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“Elections were also due, so a lot of experts were hoping that prices would boom after the election.
“And then with the further [RBA] meetings coming up and the anticipation of rates going down, it was a win-win situation for me.”
Saluja moved to Australia from India about 17 years ago, with her husband currently still living overseas in India.
She said it took her about two years to save up for a 10 per cent deposit, with her mother gifting her some money as a wedding present.
Her mortgage repayments are currently $3,088 per month, and she is on a variable interest rate of 5.79 per cent.
While interest rates are historically high for Australia, Saluja said they were still much lower than in India.
“In India, we’re used to 8 or 9 per cent, which is normal for us. So around 5 per cent is great,” she said.
Her bank, Great Southern Bank, previously passed on the February interest rate cut in full to customers.
Should interest rates drop again next week and her bank passes it on, Saluja said she plans to put the savings towards paying off her mortgage quicker.
“My priority would be paying it off as soon as I can, which is why I have an offset account as well,” she said.
More Aussies set to return to property market
Little Real Estate executive general manager of property services Anne Crarey said she was seeing a trend of first-home buyers, along with investors, returning to the market ahead of the expected interest rate cuts.
“I think it’s actually a very clever strategy because interest rates are on the decline and we are expecting a cut next week, it is going to move more purchases into the market,” she told Yahoo Finance.